EXHIBIT 2.1
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STOCK EXCHANGE AGREEMENT
DATED AS OF
JULY 1, 2005,
BY AND AMONG
BROADVIEW MEDIA, INC.,
C SQUARE EDUCATIONAL ENTERPRISES,
XXXXX X. XXXXX,
XXXXX X. XXXX,
XXXXXX X. XXXXX 1994 IRREVOCABLE TRUST U/A/D JUNE 27, 1994
AND
XXXXXX X. AND XXXXX X. XXXXX DYNASTY TRUST U/A/D AUGUST 31, 1998
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TABLE OF CONTENTS
ARTICLE I EXCHANGE OF SHARES..................................................................................1
1.1 Conveyance of Company Common Stock.......................................................................1
1.2 Conveyance of Buyer's Common Stock.......................................................................2
1.3 Tax Treatment............................................................................................2
1.4 Investment Purpose in Acquiring the Exchange Shares......................................................2
1.5 Restriction on Transfer; Compliance with Securities Act..................................................2
1.6 Restrictive Legend.......................................................................................2
ARTICLE II CLOSING; CLOSING DELIVERIES.........................................................................3
2.1 Closing..................................................................................................3
2.2 Conditions to Obligations to Close for Buyer.............................................................3
(a) Obligations.....................................................................................3
(b) Consents........................................................................................3
(c) Accuracy of Representations and Warranties......................................................3
(d) Performance.....................................................................................3
(e) Documents.......................................................................................3
(f) No Material Adverse Change......................................................................3
(g) Fairness Opinion................................................................................3
2.3 Conditions to Obligations to Close for the Company and Sellers...........................................3
(a) Obligations.....................................................................................3
(b) Accuracy of Representations and Warranties......................................................4
(c) Performance.....................................................................................4
(d) Documents.......................................................................................4
2.4 Items to Be Delivered by Sellers at Closing..............................................................4
2.5 Items to Be Delivered by Buyer at Closing................................................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS.......................................................5
3.1 Organization.............................................................................................5
3.2 Title to the Shares......................................................................................5
3.3 Capitalization...........................................................................................5
3.4 Authorization of Transaction.............................................................................5
3.5 Non-Contravention........................................................................................5
3.6 Accrediting Body and Governmental Approvals..............................................................6
3.7 Financial Statements.....................................................................................6
3.8 Absence of Undisclosed Liabilities.......................................................................6
3.9 No Adverse Changes.......................................................................................6
3.10 Taxes....................................................................................................6
3.11 Title to Assets..........................................................................................7
3.12 Condition and Sufficiency of Assets......................................................................7
3.13 Accounts Receivable......................................................................................7
3.14 Program Revenues.........................................................................................7
3.15 Accounts Payable.........................................................................................7
3.16 Inventories..............................................................................................8
3.17 Title; Condition and Quality of the Curriculum...........................................................8
3.18 Environmental Matters....................................................................................8
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3.19 Agreements...............................................................................................8
3.20 Employment Matters.......................................................................................9
3.21 Employee Plans...........................................................................................9
3.22 Insurance................................................................................................9
3.23 Litigation...............................................................................................9
3.24 Compliance with Laws; Education Department Compliance....................................................9
3.25 Banks; Etc..............................................................................................16
3.26 Governing Instruments...................................................................................16
3.27 Intellectual Property...................................................................................16
3.28 Broker's Fees...........................................................................................16
3.29 Completeness of Disclosures.............................................................................16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER.........................................................16
4.1 Organization............................................................................................17
4.2 Authorization of Transaction............................................................................17
4.3 Non-Contravention.......................................................................................17
4.4 Broker's Fees...........................................................................................17
ARTICLE V INDEMNIFICATION.................................................................................17
5.1 Indemnification by the Sellers..........................................................................17
5.2 Sellers' Participation in Defense Against Third Party Claims............................................18
5.3 Tax Audit of Company....................................................................................18
5.4 Survival of Representations.............................................................................19
ARTICLE VI ADDITIONAL COVENANTS OF THE SELLERS.............................................................19
6.1 Company's Cash Balance Covenant.........................................................................19
ARTICLE VII DEFINITIONS.....................................................................................19
7.1 Certain Defined Terms...................................................................................19
ARTICLE VIII MISCELLANEOUS...................................................................................20
8.1 Further Documents and Assurances........................................................................20
8.2 Fees and Expenses.......................................................................................21
8.3 Counterparts............................................................................................21
8.4 Notices.................................................................................................21
8.5 Entire Agreement; Modification and Waiver...............................................................22
8.6 Termination.............................................................................................22
8.7 Governing Law...........................................................................................23
8.8 Benefit.................................................................................................23
8.9 Successors and Assigns..................................................................................23
8.10 Amendment, Modification and Waiver......................................................................23
EXHIBITS
EXHIBIT A LIST OF EXCHANGE STOCK
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SCHEDULES
Company Disclosure Schedule
Buyer Disclosure Schedule
iii
STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT (the "Agreement") is entered into as of
this 1st day of July, 2005 by and among Broadview Media, Inc., a Minnesota
corporation (the "Buyer"), C Square Educational Enterprises, a Utah corporation
(the "Company"), Xxxxx X. Xxxxx ("Xxxxx"), Xxxxx X. Xxxx ("Xxxx"), the Xxxxxx X.
Xxxxx 1994 Irrevocable Trust under agreement dated June 27, 1994 ("1994 Xxxxx
Trust"), and the Xxxxxx X. and Xxxxx X. Xxxxx Dynasty Trust, under agreement
dated August 31, 1998 ("Xxxxx Dynasty Trust"), (Myhre, Kuhl, 1994 Xxxxx Trust
and Xxxxx Dynasty Trust are hereinafter referred to collectively as the
"Sellers").
RECITALS:
A. The Company operates the Utah Career College (the "School") in
West Jordan, Utah.
B. The Sellers are the legal and beneficial owners of 100% of the
issued and outstanding common stock of the Company (the "Company Common Stock").
C. The Buyer, Sellers and the Company have each agreed to engage
in the transactions contemplated hereby, pursuant to which the Sellers will
exchange (the "Exchange") all of their shares of the Company Common Stock for
five million shares of Buyer's common stock ("Buyer's Common Stock").
D. The Sellers are hereby making certain representations,
warranties, covenants and agreements in support of the transactions contemplated
by this Agreement.
E. The parties intend the Exchange to qualify as a tax-free
reorganization in accordance with the provisions of Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended (the "Code"), and all terms contained
herein shall be interpreted to effectuate such intent.
AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual agreements, warranties, covenants and agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Buyer, Sellers and the Company hereby agree as
follows:
ARTICLE II
EXCHANGE OF SHARES
1.1 Conveyance of Company Common Stock. At the Closing (as defined below),
the Sellers shall transfer, convey and deliver to Buyer the number of shares of
the Company Common Stock set forth opposite such person's name on Exhibit A
hereto, and shall deliver to
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Buyer stock certificates representing the Company Common Stock, duly endorsed to
Buyer or accompanied by duly executed stock powers in form and substance
satisfactory to Buyer.
1.2 Conveyance of Buyer's Common Stock. At the Closing, the Buyer shall
deliver to the transfer agent instructions directing such agent to issue and
deliver to the Sellers certificates evidencing Five Million (5,000,000) shares
of Buyer's Common Stock (in the amounts as set forth opposite each person's name
on Exhibit A) in exchange for all of the outstanding shares of Company Common
Stock duly registered in the names of the Sellers entitled thereto. This
transaction by which the transfers in Sections 1.1 and 1.2 shall take place are
referred to in this Agreement as the "Exchange."
1.3 Tax Treatment. The parties intend that the Exchange will qualify as a
tax-free reorganization pursuant to Section 368(a)(1)(B) of the Code.
1.4 Investment Purpose in Acquiring the Exchange Shares. Each of the
Sellers is acquiring the Buyer's Common Stock being issued in the Exchange (the
"Exchange Shares") for his own account for investment purposes only and not with
a view to their resale or distribution in violation of the Securities Act of
1933, as amended (the "Securities Act"). Each of the Sellers has the requisite
investment intent to satisfy Section 4(2) of the Securities Act. Each Seller
represents that he is an "accredited investor" as such term is used in Rule 501
under the Securities Act.
1.5 Restriction on Transfer; Compliance with Securities Act. Each of the
Sellers understands that the Exchange Shares are not freely transferable and
that such Seller may in fact be prohibited from selling the Exchange Shares for
an extended period of time. If any Seller sells or distributes the Exchange
Shares in the future, he shall sell or distribute them pursuant to the
requirements of the Securities Act and other applicable securities laws. The
Sellers will not transfer any part of the Exchange Shares without (i) effective
registration under the Securities Act and other applicable securities law, (ii)
obtaining an opinion of counsel satisfactory in form and substance to counsel
for Buyer stating that the proposed transaction, if effected without such
registration, will not result in a violation of the Securities Act and other
applicable securities laws, or (iii) providing Buyer with such seller's and
broker's affidavits or representations as reasonably required to enable Buyer's
counsel to opine that such sale is exempt under Rule 144 of the Securities Act
and under other applicable securities laws.
1.6 Restrictive Legend. Buyer may place a restrictive legend on all
certificates representing the Exchange Shares containing substantially the
following language:
"The Shares represented by this certificate have not been registered under
either the Securities Act of 1933, as amended, or applicable Blue Sky laws
and may not be sold, pledged, or otherwise transferred except in compliance
with such securities laws."
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ARTICLE III
CLOSING; CLOSING DELIVERIES
2.1 Closing. The closing of the Exchange (the "Closing") will take place
immediately following the execution of this Agreement by all parties or at such
other date and time as mutually agreed upon by the parties (the "Closing Date").
The Closing shall take place at the offices of the Buyer., 0000 Xxxx 00xx
Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000 unless a different place is agreed to in
writing by the parties hereto.
2.2 Conditions to Obligations to Close for Buyer. The Buyer's obligation to
close the transactions contemplated by this Agreement shall be conditioned on
the following:
(a) Obligations. The Sellers and the Company having successfully
performed the obligations under the Agreement.
(b) Consents. The Company and/or the Sellers having obtained all
consents necessary or appropriate for the consummation of the transactions
contemplated by this Agreement.
(c) Accuracy of Representations and Warranties. All representations
and warranties of the Sellers and the Company in this Agreement being true
and correct as of the date of this Agreement and at the time of Closing.
(d) Performance. The Company and the Sellers shall have duly performed
all covenants, agreements, and obligations required under this Agreement to
be observed or performed by him on or before the Closing Date.
(e) Documents. The Company and the Sellers shall have delivered to the
Buyer all documents to be delivered under this Agreement by the Company and
Sellers.
(f) No Material Adverse Change. There shall have been no Material
Adverse Change in the Company since the Balance Sheet Date.
(g) Fairness Opinion. Buyer shall have received from Xxxxxxxxx, Agio &
Xxxxx an opinion, dated within thirty (30) days of this Agreement, stating
that the amount of Buyer stock to be exchanged for all of the Company stock
is fair to the Buyer from a financial point of view.
2.3 Conditions to Obligations to Close for the Company and Sellers. The
Sellers' and the Company's obligation to close the transactions contemplated by
this Agreement shall be conditioned on the following:
(a) Obligations. The Buyer having successfully performed the
obligations under the Agreement.
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(b) Accuracy of Representations and Warranties. All representations
and warranties of the Buyer in this Agreement being true and correct as of
the date of this Agreement and at the time of Closing.
(c) Performance. The Buyer shall have duly performed all covenants,
agreements, and obligations required under this Agreement to be performed
by it on or before the Closing Date.
(d) Documents. The Buyer shall have delivered to the Company and
Sellers those documents to be delivered to Sellers under this Agreement on
or before the Closing Date.
2.4 Items to Be Delivered by Sellers at Closing. On the Closing Date, the
Sellers will deliver the following to the Buyer as appropriate:
(a) Stock certificates, free and clear of all liens and encumbrances,
and stock powers for all of their shares of the Company Common Stock to the
Buyer, with such stock certificates and stock powers in the forms
reasonably satisfactory to Buyer.
(b) Certified resolutions of the Company's shareholders and Board of
Directors authorizing the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein;
(c) Articles of Incorporation and Bylaws of the Company, certified by
the Company's Secretary;
(d) The Sellers shall have delivered to Buyer a list setting forth
each of their federal taxpayer identification numbers; and
(e) Such other documents as Buyer may reasonably request to carry out
the transactions contemplated by this Agreement.
2.5 Items to Be Delivered by Buyer at Closing. On the Closing Date, the
Buyer will deliver to or cause to be delivered the following to the Sellers:
(a) Transfer agent instructions for the issuance of stock certificates
representing five million shares of Buyer's Common Stock in the names of
Sellers in the amounts as set forth on Exhibit A;
(b) Certified copies of corporate resolutions of Buyer, authorizing it
to enter into the transactions contemplated herein; and
(c) Such other documents that the Sellers may reasonably request to
carry out the transactions contemplated by this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Except as disclosed in a document delivered by the Company to Buyer prior
to the execution of this Agreement and labeled as the Company Disclosure
Schedule, with each exception listed under the section number referencing the
Section of this Article III to which such exception applies (the "Company
Disclosure Schedule"), Sellers, jointly and severally, represent and warrant to
Buyer that the statements contained in this Article III are correct and complete
as of the date of this Agreement.
3.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Utah, and has all
requisite power and authority, corporate and otherwise, to own its properties
and assets and conduct the business in which it is presently engaged. The
Company is not qualified to do business, and is not required to be qualified to
do business, in any jurisdiction other than Utah. The Company does not have any
subsidiaries, and the Company is not a shareholder of, or partner or joint
venturer with, any other person or entity.
3.2 Title to the Shares. The Company Common Stock is owned by the Sellers
free and clear of any and all claims, liens, pledges, charges, encumbrances,
mortgages, security interests, options, restrictions on transfer, rights of
first refusal, preemptive or other rights or other interests or equities or
imperfections of title whatsoever.
3.3 Capitalization. The Company has authorized capital stock consisting of
100,000 shares of common stock, of which 70,336 shares are issued and
outstanding. All of the Company Common Stock is validly issued, fully paid and
nonassessable. The Company Common Stock constitute all of Company's issued and
outstanding shares of capital stock. There are no rights, options, contracts or
obligations outstanding in favor of any party for the purchase of any shares of
capital stock of the Company. All shares of capital stock of the Company have
been issued in compliance with federal and state securities laws.
3.4 Authorization of Transaction. The execution, delivery and performance
by the Sellers and the Company of this Agreement and the consummation by Seller
and the Company of the transactions contemplated hereby and thereby are within
the Sellers and the Company's power and authority and have been and, to the
extent not executed as of the date hereof, will be prior to execution, duly
authorized by all necessary corporate action of the Company. This Agreement
constitute, or upon execution will constitute, valid and the binding agreement
of the Sellers and the Company, enforceable against the Sellers and the Company
in accordance with their respective terms.
3.5 Non-Contravention. The execution and delivery of this Agreement and the
compliance with the terms and provisions hereof, on the part of the Sellers and
the Company will not (a) cause the Company and the Sellers to breach any order,
judgment, ruling, statute, ordinance or regulation of any governmental
authority, domestic or foreign, that is applicable to the Sellers and the
Company, (b) conflict with or result in a violation of any organization document
of the Company, or (c) conflict with or result in a breach of any of the terms,
conditions or provisions of any agreement or instrument to which the Sellers and
the Company is
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a party or by which any of them may be bound, or constitute a default
thereunder. Each person whose consent to the execution, delivery or performance
of this Agreement by the Company is legally or contractually required has been
obtained.
3.6 Accrediting Body and Governmental Approvals. To the best of Sellers'
and the Company's knowledge, there exist no facts or circumstances attributable
to the Company or the School that would cause the U.S. Department of Education
("DOE"), or any other governmental authority or accrediting body (including,
without limitation, the Accrediting Commission of Career Schools and Colleges of
Technology -- "ACCSCT") to refuse the Company's or the School's accreditation,
eligibility and licensure after or in connection with the transactions
contemplated by this Agreement. The execution, delivery and performance by the
Company of this Agreement and the consummation of the Exchange by the Sellers,
require no action by or in respect of, or filing with, any governmental body,
agency, official or authority.
3.7 Financial Statements. The Company delivered to the Buyer true and
complete copies of (i) audited balance sheets of the Company as of May 31, 2004
and May 31, 2003, and the related audited statements of income, retained
earnings and cash flows for the periods then ended, certified by the Company's
accountants, and (ii) the unaudited balance sheet of the Company as of May 31,
2005 (the "Balance Sheet Date"), and the related unaudited statement of income
for the period then ended (collectively, the "Financial Statements"). Such
Financial Statements have been prepared in accordance with GAAP consistently
applied and fairly represent the financial position and results of operations of
the Company's business as of and for the respective periods then ended, except,
in the case of the unaudited financial statements, for the absence of certain
footnotes and normal year-end adjustments not expected to be material in amount.
3.8 Absence of Undisclosed Liabilities. There are no liabilities or
obligations of the Company of any nature (whether known or unknown, due or to
become due, accrued, absolute, contingent or otherwise) that were not disclosed
or fully reflected or reserved against on the Financial Statements, except
liabilities that have arisen after the latest date of the Financial Statement in
the ordinary course of business (none of which is a material liability, and none
has arisen as a result of breach of contract, tort, or infringement). The
Company has not assumed, guaranteed, endorsed or otherwise become directly or
contingently liable on or for any indebtedness of any other person.
3.9 No Adverse Changes. Since May 31, 2004, there has not been, occurred,
or arisen any change in, or any event, condition, circumstance, or development
of any character that, individually or in the aggregate, has or may reasonably
be expected to have a material adverse effect on the business or operations of
the Company; and the Company has conducted its business and operations solely in
the ordinary course of business and consistent with past practice.
3.10 Taxes. All federal and state taxes of the Company have been paid in
full. The Company has filed all federal and state income tax returns and all
other returns with respect to any taxes, either federal, state or local, which
are required to be filed. Such returns have been correctly and accurately
prepared. During the three years preceding the date hereof, the
6
Company's tax returns have not been subjected to any examination or audit by
governmental authorities. No additional taxes, penalties or interest is, are or
will be owed with respect to such returns. All taxes reflected thereon have been
paid; no notice of any deficiency, assessments or additions to tax or of any
audit or other examination or investigation have been received by the Sellers or
the Company and neither has waived any statute of limitations with respect to
any taxes reflected on such return. Deferred taxes have been properly reflected
on the Financial Statements in all material respects. There are no other taxes
of any kind or character for which the Company is or may be liable which are now
past due, delinquent and/or unpaid.
3.11 Title to Assets. The Company owns free and clear of all claims, liens,
pledges, charges, mortgages, security interests, encumbrances, equities or other
imperfections of title of any nature whatsoever, or has rights to use under
licenses or leases with third parties, all assets included in the Financial
Statements and all other assets which the Company purports to own or use. Such
assets constitute all assets associated with, used in or necessary to the
business or operations of the Company.
3.12 Condition and Sufficiency of Assets. None of the buildings, plants,
structures, and equipment owned or leased by the Company is in need of any item
of maintenance or individual repair for which the Company would be responsible
for payments in an amount greater than $20,000.00.
3.13 Accounts Receivable. All accounts receivable of the Company reflected
on the Financial Statements represent services actually rendered in the ordinary
course of business or valid claims as to which full performance has been
rendered, and the reserves against the accounts receivable for returns and bad
debts are commercially reasonable and have been calculated in a manner
consistent with past practice. Except to the extent reserved against the
accounts receivable in the appropriate Financial Statements, no counterclaims or
offsetting claims with respect to the accounts receivable have been formally
asserted. Since the Balance Sheet Date, the Company has not discounted or sold
any of their respective accounts receivable or any portion thereof (either to
the debtor(s) or in connection with the sale of such receivables to a third
party).
3.14 Program Revenues. For the Company's current fiscal year and for the
past five fiscal years, the School did not receive revenues from programs
authorized by Title IV or other federal student financial aid funds in excess of
requirements mandated by Title IV, and the School satisfies the requirements
regarding Title IV program funds established by the DOE as set forth at 34
C.F.R. Section 600.5.
3.15 Accounts Payable. All accounts payable shown on the Financial
Statements and all accounts payable in existence on the Closing Date are the
result of bona fide purchases of goods or services by the Company in the
ordinary course of business and consistent with past business practices and are
not yet due and payable or are due and payable but not beyond the date upon
which the Company customarily pays such accounts payable without incurring late
charges or penalties or losing cash discounts or rebates.
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3.16 Inventories. The only inventories maintained by the Company in
connection with the operation of the School consist of textbooks and educational
materials used in the ordinary course of business of the School and are
reflected on the Financial Statements as "inventories." Such textbooks and
educational materials are reflected at cost (subject to the following sentence),
are usable in the ordinary and regular course of business, are fit and
sufficient for the purpose for which they were purchased, and, at the date of
this Agreement, are in customary amounts appropriate to Seller's operations of
the School. All excess or obsolete items have been written down to net
realizable value or written off in accordance with GAAP.
3.17 Title; Condition and Quality of the Curriculum. The Company owns
outright, and has good and marketable title to, the Curriculum of the School. No
employee or Affiliate of the Company or any of the Sellers or any other Person
owns or has any interest, directly or indirectly, in any part of the Curriculum.
The Company does not use any part of the Curriculum by consent of any other
Person and is not required to and does not make any payments to others with
respect thereto. No component of the Curriculum infringes or violates any
copyright, patent, trade secret, trademark, service xxxx, registration or other
proprietary right of any other Person, and the Company's past and current use of
any part of the Curriculum does not infringe upon or violate any such right. The
term "Curriculum," as used in this Agreement, means the curriculum used in the
educational programs of the Schools in the form of computer programs, slide
shows, texts, films, videos or any other form or media, including, without
limitation, the following items: (1) course objectives, (2) lesson plans, (3)
exams, (4) class materials (including interactive or computer-aided materials),
(5) faculty notes, (6) course handouts, (7) diagrams, (8) syllabi, (9) sample
externship and placement materials, (10) clinical checklists, (11) course and
faculty evaluation materials, (12) policy and procedure manuals, and (13) other
related materials. The Curriculum shall also include, without limitation, (a)
all copyrights, copyright applications, copyright registrations and trade
secrets relating to the above-listed items and (b) Revisions. The term
"Revisions," as used in this Agreement, means all periodic updates or revisions
to the Curriculum as developed or used by the Company during its period of
operation of the School from the beginning of time through the Closing Date.
3.18 Environmental Matters. No hazardous waste, substances or materials, or
oil or petroleum products have been generated, transported, used, disposed,
stored or treated by the Company, except in material compliance with applicable
environmental laws; no hazardous wastes, substances or materials, or oil or
petroleum products have been released, discharged, disposed, or otherwise caused
to enter the soil or water in, under or upon any real property owned, leased or
operated by the Company, except in material compliance with applicable
environmental laws. The Company is in compliance with all applicable
environmental, health and safety laws and regulations. No material expenditures
are or will be required in order to comply with any existing statute, law or
regulation relating to the environment or occupational health and safety.
3.19 Agreements. The Company's Disclosure Schedule contains an accurate and
complete list of all leases, licenses, agreements, contracts and commitments to
which the Company is a party or by which it is bound. The Company has not
breached, and has not received in writing any claim or threat that it has
breached, any of the terms or conditions thereof. Each such lease, license,
agreement, contract and commitment is in full force and effect
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and is not subject to any material default thereunder by any party obligated to
the Company pursuant thereto. The Company has not received any notice of default
thereunder and, to the Sellers' knowledge, no event exists which, with notice or
lapse of time, or both, would constitute a default thereunder. The consummation
of the transactions contemplated hereby will not result in a default thereunder.
3.20 Employment Matters. No employee of the Company is represented by any
labor organization. There is and has been no employment controversy, dispute or
claim. The Company has no, and on the Closing Date will not have any,
obligations to the Company's directors, officers, employees or agents other than
obligations arising in the ordinary course of business on account of wages,
salaries, commissions and benefits for prior services performed or business
produced. The Company has complied and is in compliance with all applicable
employment laws.
3.21 Employee Plans. Except as listed in Section 3.21 of the Company's
Disclosure Schedule, the Company does not maintain any employee plans,
including, without limitation, any pension, retirement, disability, medical,
dental, or other health insurance plan, life insurance or other death benefit
plan, profit sharing, deferred compensation, stock option, bonus or other
incentive plan, vacation benefit plan, severance plan, or other employee benefit
plan or arrangement. Neither the Company nor any of its directors, officers,
employees or other fiduciaries has committed any breach of fiduciary
responsibility imposed by any applicable law plans that would subject the
Company, Buyer, or any of their respective directors, officers or employees to
any liability under applicable law. To the extent required (either as a matter
of law or to obtain the intended tax treatment and tax benefits), all employee
benefit plans that the Company maintains or to which it contributes comply in
all material respects with the requirements of applicable law.
3.22 Insurance. The Company has maintained the insurance described in
Section 3.22 of the Company Disclosure Schedule. All such insurance is in full
force and effect, and Company is not in default with respect to any of such
insurance policies. The Company has promptly and adequately notified the
Company's insurance carriers of any and all known claims with respect to the
operations of the Company for which the Company is insured.
3.23 Litigation. There are no pending or, to the Sellers' knowledge,
threatened litigation, proceeding or investigation against the Company nor is
the Company subject to any existing judgment, order, decree or other action
affecting the operation of its business or which would prevent, impede or make
illegal the consummation of the transactions contemplated in this Agreement, or
which would have a material adverse effect on the Company.
3.24 Compliance with Laws; Education Department Compliance.
(a) To the best of the Sellers' and the Company's knowledge, the
Company and the School currently maintain and have maintained without
interruption, all licenses, permits, approvals, clearances, consents,
certificates and other evidences of approval or authority of the Company
and the School that are necessary or appropriate to the conduct of the
business of the Company or the School to the full extent as then or now
conducted
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(collectively, the "Educational Approvals") issued by any person, entity or
organization, whether governmental, government chartered, private, or
quasi-private, that engages in granting or withholding Educational
Approvals for and regulating post-secondary schools, their agents, or
employees in accordance with standards relating to the performance,
operation, financial condition, or academic standards of such schools, and
the provision of financial assistance by and to such schools ("Educational
Agencies"). The Company Disclosure Schedule contains a complete listing and
summary description of all Educational Approvals in effect, the Educational
Agency that issued such Educational Approvals and the periods in which each
Educational Approval is or was in full force and effect and the period, if
any, when each was subject to any conditions, limitations or restrictions.
The Sellers have delivered to Buyer complete and correct copies of all
Educational Approvals in effect on or since September 3, 2004. The Company,
the Sellers and the School are and, since September 3, 2004, have been in
compliance with the terms and conditions of all such Educational Approvals,
and have timely notified, and obtained all required approvals from, all
applicable Education Departments for each substantive change in any of the
Sellers, the Company or the School since September 3, 2004, including any
changes in ownership or control. There are no proceedings pending to
revoke, suspend, limit, condition, restrict or withdraw any Educational
Approval, and, there are no facts, circumstances or omissions concerning
any of the Sellers, the Company or the School that could result in a such a
proceeding as a result of the operations or management of the Company or
the School or as a result of the transactions contemplated by this
Agreement. Except as disclosed on the Company Disclosure Schedule, since
September 3, 2004, none of the Sellers, the Company or the School has
received oral/written notice that the Company or the School is in violation
of any of the terms or conditions of any Educational Approval or alleging
the failure to hold or obtain any Educational Approval. None of the
Sellers, the Company or the School has received written or oral notice that
any of the Educational Approvals will not be renewed, and there is no basis
for nonrenewal. In addition, and without limiting the foregoing:
(1) The Sellers, the Company and the School possess and have
possessed, all requisite Educational Approvals for each educational
program the School has offered and for each campus, location, or
facility where the School has offered all or any portion of an
educational program. The Company Disclosure Schedule contains a
correct and complete list of every campus, location or facility
operated or used by the School.
(2) The Sellers, the Company and the School possess, and have
possessed, all requisite Educational Approvals to operate the School
in each jurisdiction in which the School is or was located or in which
they conduct any operations or are otherwise required to obtain such
Educational Approvals, including providing educational services in
person or via distance learning, student marketing or recruiting.
(3) Except as contained in the Company Disclosure Schedule, the
School is, and has been fully certified by the Department of Education
to participate in the federal student assistance authorized by Title
IV of the Higher
10
Education Act of 1965, as amended ("Title IV Programs") and is a party
to, and in compliance with, a valid and effective Program
Participation Agreement with the Department of Education that is in
full force and effect. Except as set forth on the Company Disclosure
Schedule, none of the Sellers, the Company or the School is subject
to, or has been, threatened with, any fine, limitation, suspension or
termination proceeding, or subject to any other action or proceeding
by the Department of Education that could result in the suspension,
limitation, conditioning, or termination of certification or
eligibility, or a liability or fine. To the Sellers' Knowledge, there
are no facts, circumstances, or omissions concerning any of the
Sellers, the Company or the School that could result in such an action
by the Department of Education.
(4) The Sellers, the Company and the School is, and has been, in
compliance in all material respects with all applicable rules,
regulations and requirements pertaining to the Schools' participation
in the Title IV Programs. Except as disclosed on the Company
Disclosure Schedule, to the Sellers' Knowledge, there are no facts,
circumstances, or omissions concerning the Company or the School that
could result in a finding of non-compliance with regard to such rules,
regulations and requirements. Without limiting the foregoing:
(i) Each education program offered by the School, including
programs involving externships, internships or consortium
agreements, was and is an eligible program in accordance
with all applicable rules, regulations and requirements,
including the requirements of 34 C.F.R. Section 668.8, and
the School has properly measured the length of such
education programs for the purpose of disbursing Title IV
program funding to students enrolled in each such program.
(ii) The School possesses the Department of Education approvals
and other Educational Approvals necessary for each main
campus, branch campus, additional location and other
facility or site at which the School offered or students
received all or part of an educational program and at which
students received funds under the Title IV Programs.
(iii) The School is and has been duly qualified as, and is and
has been in full compliance with, the DOE definition of
"proprietary institution of higher education."
(iv) The School has complied with the limitation on the receipt
of Title IV Program funding under the "90/10 Rule" codified
at 34 C.F.R. Section 600.5(a)(8), (d) for each of the five
(5) fiscal years ended on May 31, 2004, 2003, 2002, 2001,
and 2000.
11
(v) For each fiscal year, the School and the Sellers have
satisfied the standards of financial responsibility in
accordance with 34 C.F.R. Section 668.171-175. Neither the
Company nor the School has lacked financial responsibility
for any fiscal year period or has been required by notice or
law to post a letter of credit or other form of surety for
any reason.
(vi) The School has not been subject to the reimbursement or cash
monitoring payment method as described at 34 C.F.R. Section
668.162 or any predecessor regulation.
(vii) The School has timely, filed with the DOE all required
compliance audits and audited financial statements,
including those required by 34 C.F.R. Section 668.23 or any
predecessor regulation.
(viii) The School has calculated and paid refunds and calculated
dates of withdrawal and leaves of absence in accordance with
all applicable rules, regulations and requirements,
including the requirements of 34 C.F.R. Section 668.22, 34
C.F.R. Section 682.605 and any predecessor regulations. All
refunds due to be paid to any students prior to the Closing
Date pursuant to any Educational Agency requirements have
been paid in full.
(ix) The School has disbursed and processed Title IV Program
funds in accordance in all material respects with all
applicable rules, regulations and requirements, including
the requirements of 34 C.F.R. Section 668.164, 34 C.F.R.
Section 682.604 and any predecessor regulations.
(x) The School has properly determined students' eligibility to
obtain Title IV Program funds for which they are eligible
prior to disbursing, and has disbursed, all Title IV Program
funds in accordance in all material respects with all
applicable rules, regulations and requirements, including
the requirements of 34 C.F.R. Section 682.201, 34 C.F.R.
Section 668, Subpart C, and any predecessor regulation.
(xi) The School has at all times complied with the limitations in
34 C.F.R. Section 600.7 on the number of courses that the
School may offer by correspondence or telecommunications,
the number of students who may enroll in such courses, the
number of students that were incarcerated, and the number of
students that had neither a high school diploma nor the
recognized equivalent of a high school diploma.
12
(xii) Listed on the Company Disclosure Schedule is the accurate
published cohort default rate for the School calculated by
the DOE and issued pursuant to 34 C.F.R. Section 668.181-186
or predecessor regulations, for the cohort years ended May
31, 2002 and 2003.
(xiii) The School has not participated in the Federal Xxxxxxx
Loan Program or received a Federal Xxxxxxx Loan cohort
default rate since May 31, 2003.
(xiv) Listed on the Company Disclosure Schedule is a complete and
correct list of all surety bonds and other forms of security
that the Company or any School has filed with any
Educational Agency with respect to its state authorization,
recruiter permits or other matters.
(xv) The School has complied in all material respects with all
requirements of the Family Educational Rights and Privacy
Act, 20 U.S.C. 1232g, and related regulations at 34 C.F.R.
Pt. 99.
(xvi) Except as set forth on the Company Disclosure Schedule, the
School has timely filed complete and correct information
with the DOE's Integrated Postsecondary Education Data
System.
(5) The Company Disclosure Schedule contains a list of all DOE
program reviews, DOE Office of Inspector General audits, compliance
audits, guaranty agency reviews and reviews by any Educational
Agencies ("Compliance Reviews") conducted at the School. Except as
disclosed on the Company Disclosure Schedule, no such Compliance
Review, individually or in the aggregate, has materially adversely
affected the School. Nor has any such Compliance Review resulted in
the imposition of any material liability, financial or otherwise,
affecting the Sellers, the Company or the School. The School has
complied with, and fully resolved and satisfied, all of the findings
and conditions arising from any Compliance Reviews and no Compliance
Review remains pending or unresolved except as disclosed on the
Company Disclosure Schedule. The Sellers have delivered to Buyer
complete and correct copies of all Compliance Reviews issued and all
correspondence related thereto.
(6) Except as otherwise set forth in the Company Disclosure
Schedule, the School is not on probation, monitoring or warning status
with any Educational Agency, including any accrediting body or any
state regulatory agency or guaranty agency, and the School has not
been subject to any adverse action by any Educational Agency
(including being directed to show cause why accreditation or other
Educational Approval should not be revoked, withdrawn, conditioned,
suspended or limited) to revoke, withdraw, deny, suspend, condition or
limit accreditation. To the Sellers' Knowledge, there are no facts,
13
circumstances or omissions concerning any of the Sellers or the School
that could lead to any such actions by an Educational Agency.
(7) The Sellers, Company and the School have complied with all
written stipulations, conditions and other requirements imposed by any
Educational Agency at the time of, or since, the last issuance of any
Educational Approval, including but not limited to the timely filing
of all required reports and responses.
(8) Neither any Seller, the Company, or the School provides, or
(since change in the laws making such illegal) has provided or
contracted with any entity that provides, any commission, bonus or
other incentive payment based directly or indirectly on success in
securing enrollments or awarding financial aid to any persons or
entities engaged in any student recruiting or admissions activities or
in making decisions regarding the awarding of student financial aid.
(9) Except as set forth on the Company Disclosure Schedule, all
student financial aid grants and loans, disbursements and record
keeping relating thereto have been completed by the School in
compliance in all material respects with all federal and state
requirements, and there are no material deficiencies in respect
thereto. Except for any deficiencies that are not material, the
students at the School have been funded at the proper time and in the
amount for which they were eligible, and such student's records
conform in form and substance to all relevant regulatory requirements.
All appropriate reports and surveys have been accurately prepared,
taken and filed timely in all material respects.
(10) None of the Sellers, the Company or the School or any Person
that exercises substantial control over the School (as the term
"substantial control" is defined in 34 C.F.R. Section 668.174(c)(3)),
or member of such person's family (as the term "family" is defined in
34 C.F.R. Section 668.174(c)(4)), alone or together, (i) exercises or
exercised substantial control over another school or third-party
servicer (as that term is defined in 34 C.F.R. Section 668.2) that
owes a liability for a violation of a Title IV Program requirement or
(ii) owes a liability for a Title IV Program violation.
(11) Except as set forth in 3.24(a)(11) of the Company Disclosure
Schedule, none of the Sellers, the Company or the School or any Person
or entity that exercises substantial control over the School, or
member of such person's family, has filed for relief in bankruptcy or
had entered against it an order for relief in bankruptcy.
(12) To the Sellers' Knowledge, none of the Sellers, the Company
or the School or any of their employees have pled guilty to, pled nolo
contenders to, or been found guilty of, a crime involving the
acquisition, use or expenditure of funds under the Title IV Programs
or been judicially determined to have committed fraud involving funds
under the Title IV Programs.
14
(13) To the Sellers' Knowledge, none of the Sellers, the Company
or the School has employed in a capacity involving administration of
funds under the Title IV Programs or the receipt of funds under those
programs, any individual who has been convicted of, or has pled polo
contenders or guilty to, a crime involving the acquisition, use or
expenditure of federal, state or local government funds, or has been
administratively or judicially determined to have committed fraud or
any other material violation of law involving federal, state or local
government funds.
(14) Except as set forth on the Company Disclosure Schedule, none
of the Sellers, the Company or the School contracts with, or has
contracted with, a third-party servicer (as such term is defined in 34
C.F.R. 668.2) to provide any services in connection with the
processing or administration of the Schools' administration of the
Title IV Programs.
(15) None of the Sellers, the Company or the School provides, or
has provided, any educational instruction on behalf of any other
institution or organization of any sort other than the School. No
other institution or organization of any sort provides, or has
provided, any educational instruction on behalf of any of the Schools.
(b) Recruitment: Admissions Procedures; Attendance.
(1) Identified on the Company Disclosure Schedule are all policy
manuals and other statements of procedures or instruction relating to
recruitment of students, including procedures for assisting in the
application by prospective students for direct or indirect state or
federal financial assistance; admissions procedures, including any
descriptions of procedures for ensuring compliance with state or
federal or other appropriate standards or tests of eligibility;
procedures for encouraging and verifying attendance, minimum required
attendance policies, and other relevant criteria relating to course
completion and certification (collectively referred to as the "Policy
Guidelines"). True and complete copies of the Policy Guidelines have
been delivered to Buyer. The operations of the Sellers, the Company
and the School have been conducted in all material respects in
accordance with the Policy Guidelines which comply with all applicable
rules, regulations and requirements.
(2) Complete and correct books and records for all present and
past students attending the School have been maintained consistent
with the operations of a school business in all material respects. All
forms and records have been prepared, completed, maintained and filed
in accordance with all applicable federal and state laws and
regulations, and are complete and correct in all material respects.
15
(c) Compliance. To the best of the Company's and Sellers' Knowledge,
the Company and School is in compliance with all of the regulatory
compliance issues in this Section 3.24.
3.25 Banks; Etc. The Company Disclosure Schedule contains an accurate and
complete list of: (a) the names and account numbers of each of the Company's
bank accounts, brokerage accounts, savings accounts, certificates of deposit and
similar cash investments, and safe-deposit boxes, together with the
identification of persons authorized to withdraw or otherwise deal with them,
(b) all powers of attorney granted by the Company together with the names of all
persons, if any, holding such powers of attorney, and (c) all governmental
licenses held or required to be held by the Company to conduct its business as
currently conducted.
3.26 Governing Instruments. Copies of the Articles of Incorporation and
Bylaws of the Company have been delivered to Buyer and are, as of the date of
this Agreement, complete and correct. The minute books and other books and
records of the Company are complete and correctly reflect in all material
respects all corporate actions of the Company taken at all meetings or through
written action and correctly record all resolutions of the Company of which
certified copies have been delivered to other parties.
3.27 Intellectual Property. The Company Disclosure Schedule sets forth a
true and complete list of all intellectual property, including all marks,
copyrights and software, licensed to or by or otherwise used in or which arise
from the conduct of the business or operations of the Company. Except as set
forth in the Company Disclosure Schedule, the Company has good title to, and the
full and unrestricted right to use under licenses, such intellectual property,
free and clear of all liens, charges, royalties, encumbrances, adverse claims,
or third party claims or interests of any kind whatsoever. To the best of
Sellers' knowledge, the Company is not in conflict with or in violation or
infringement of, and has not received any notice of any conflict with or
violation or infringement of or any claimed conflict with, any asserted rights
of any other person with respect to any such intellectual property owned or used
by the Company.
3.28 Broker's Fees. The Company and Sellers have no liability or obligation
to pay any fees or commissions with any broker, finder or similar agent with
respect to the transactions contemplated by this Agreement.
3.29 Completeness of Disclosures. None of the representations or warranties
made by the Company and the Sellers herein, and no other information furnished
or to be furnished by or on behalf of the Company and the Sellers to Buyer
pursuant hereto, or in connection with the transaction contemplated by this
Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit any material fact the omission of which would be misleading.
The Company Disclosure Schedule completely and correctly presents the
information required by this Agreement to be set forth in them.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as disclosed in a document delivered by the Buyer to the Company and
Sellers
16
prior to the execution of this Agreement and labeled as the Buyer Disclosure
Schedule, with each exception listed under the section number referencing the
Section of this Article IV to which such exception applies (the "Buyer
Disclosure Schedule"), Buyer represents and warrants to the Company and Sellers
that the statements contained in this Article IV are correct and complete as of
the date of this Agreement.
4.1 Organization. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Minnesota, and has all
requisite power and authority, corporate and otherwise, to own its properties
and assets and conduct the business in which it is presently engaged. Buyer is
not qualified to do business, and is not required to be qualified to do
business, in any jurisdiction other than Minnesota. Buyer does not have any
subsidiaries, and Buyer is not a shareholder of, or partner or joint venturer
with, any other person or entity.
4.2 Authorization of Transaction. The execution, delivery and performance
by the Buyer of this Agreement and the consummation by Buyer of the transactions
contemplated hereby and thereby are within the Buyer's corporate power and
authority and have been and, to the extent not executed as of the date hereof,
will be prior to execution, duly authorized by all necessary corporate action of
the Buyer. This Agreement constitute, or upon execution will constitute, a valid
and binding agreement of the Buyer, enforceable against it in accordance with
their respective terms.
4.3 Non-Contravention. The execution and delivery of this Agreement and the
compliance with the terms and provisions hereof, on the part of Buyer will not
(a) cause the Buyer to breach any order, judgment, ruling, statute, ordinance or
regulation of any governmental authority, domestic or foreign, that is
applicable to the Buyer, (b) conflict with or result in a violation of any
organization document of the Buyer, or (c) conflict with or result in a breach
of any of the terms, conditions or provisions of any agreement or instrument to
which the Buyer is a party or by which any of them may be bound, or constitute a
default thereunder. Each person whose consent to the execution, delivery or
performance of this Agreement by the Buyer that is legally or contractually
required has been obtained.
4.4 Broker's Fees. The Buyer has no liability or obligation to pay any fees
or commissions with any broker, finder or similar agent with respect to the
transactions contemplated by this Agreement.
ARTICLE VI
INDEMNIFICATION
5.1 Indemnification by the Sellers. Subject to the provisions of this
Article V, the Sellers jointly and severally agree to indemnify and hold Buyer
(and its affiliates, officers, directors and employees -- collectively the
"Buyer" as used in this Article V) harmless at all times from and after the date
of this Agreement, against and in respect of all damages, losses, and
liabilities (to the extent not covered by insurance or not actually recovered
under the applicable policies), and all fees, costs and expenses (including
reasonable attorneys' fees) related thereto (collectively, the "Losses") that
Buyer may suffer or incur in connection with the misrepresentation or breach by
the Sellers or the Company, of any of their respective
17
representations, warranties, covenants and agreements contained in this
Agreement or in any exhibit, schedule, certificate or other document delivered
or to be delivered pursuant to the terms of this Agreement or otherwise
incorporated into this Agreement or in connection with any third party claim
alleging circumstances constituting such a breach.
5.2 Sellers' Participation in Defense Against Third Party Claims. The
Sellers shall be entitled to assume the defense of any claims for which Buyer
may seek indemnification from the Sellers under this Agreement and which are
brought by parties unaffiliated with Buyer. If the Sellers elect in writing to
assume the defense of any lawsuit or action with respect to any claim for which
Buyer is seeking indemnification under this Agreement, the Sellers shall take
control of the defense and investigation of such lawsuit or action and shall
employ and engage an attorney of their own choice to handle and defend the same,
at the Sellers' cost. Buyer shall have the right to employ counsel with respect
to any such claim, but the fees and expenses of such counsel shall be at the
expense of Buyer unless (i) the employment of counsel by Buyer has been
authorized in writing by the Sellers, or (ii) the Sellers shall not in fact have
employed counsel to assume the defense of such claim, in each of which case, the
fees and expenses of counsel shall be at the expense of the Sellers. Regardless
of which party is controlling the defense of any claim, (i) both the Sellers and
Buyer shall act in good faith, (ii) no settlement of such claim may be agreed to
without the written consent of both the Sellers and Buyer, which consent shall
not be unreasonably withheld, and (iii) the fees and expenses of the counsel
retained to defend such claim shall be payable by the Sellers, except as
provided in the foregoing sentence. Buyer shall notify Sellers within 10
business days of any claim or lawsuit commenced by a third party for which Buyer
may seek indemnification from Sellers unless one or more of Sellers is already
aware of such claim, but the failure to so notify will not affect Sellers'
indemnification obligations hereunder unless Sellers are materially and
adversely prejudiced by the lateness of any such notice. The controlling parties
shall deliver, or cause to be delivered, to the other parties copies of all
correspondence, pleadings, motions, briefs, appeals for other written statements
relating to or submitted in connection with the defense of any claim, and timely
notices of, and the right to participate in (as an observer), any hearing or
other court proceeding relating to such claim. Buyer shall cooperate in all ways
and respects with the Sellers and such attorneys in the investigation, trial and
defense of any claim and any appeal rising therefrom.
5.3 Tax Audit of Company. If any taxing authority commences an audit of the
Company or other proceeding with regard to the Company which could result in an
adjustment in any liability for taxes, which adjustment if sustained could
reasonably be expected to require the Sellers to make an indemnity payment (an
"Audit"), Buyer shall notify the Sellers promptly of such proposed adjustment
and of all action taken or proposed to be taken by the taxing authority. If the
Audit relates to taxes for any period or periods of the Company ending on or
prior to the Closing Date, the Sellers shall have the right to conduct such
Audit as to such periods and shall not, with respect thereto, either (i) take a
position or (ii) settle such Audit on a basis which would increase the liability
for taxes for any period subsequent to the Closing Date without the consent of
Buyer, which consent shall not be unreasonably withheld. In any Audit of a
period which commences prior to the Closing Date and which ends after the
Closing Date, Buyer shall conduct the Audit in consultation with the Sellers or
their appointed representative, provided, that, neither
18
party shall settle the Audit without the consent of the other, which consent
shall not be reasonably withheld.
5.4 Survival of Representations. The representations, warranties, covenants
and agreements of the parties contained in or made pursuant to this Agreement
shall survive the Closing and shall in no way be affected by any investigation
of the subject matter thereof made by or on behalf of any other party.
ARTICLE
VII ADDITIONAL COVENANTS OF THE SELLERS
6.1 Company's Affiliated Receivable Balance Covenant. The Sellers, jointly
and severally, covenant that as of the Closing Date, any and all receivable
balances owed to the Company by the Company's (or Xxxxx X Xxxxx'x) associated
and/or affiliated entities will be paid in full to the Company. On the Closing
Date, the Sellers shall provide evidence satisfactory to the Buyer verifying the
payment of such receivable balances and deposit of such cash in the Company's
bank accounts.
ARTICLE VIII
DEFINITIONS
7.1 Certain Defined Terms. As used in this Agreement, the following terms
shall have the meanings specified in this Section 7.1 unless the context
otherwise requires.
(a) "ACCSCT" has the meaning set forth in Section 3.1.
(b) "Audit" has the meaning set forth in Section 6.3.
(c) "Balance Sheet Date" has the meaning set forth in Section 4.7.
(d) "Buyer" has the meaning set forth in Section 6.1.
(e) "Buyer Disclosure Schedule" has the meaning set forth in Article
IV.
(f) "Buyer Securities" has the meaning set forth in Section 5.2.
(g) "Closing" has the meaning set forth in Section 2.1.
(h) "Closing Date" has the meaning set forth in Section 2.1.
(i) "Company Disclosure Schedule" has the meaning set forth in Article
III.
(j) "Compliance Reviews" has the meaning set forth in Section 3.24.
(k) "Curriculum" has the meaning set forth in Section 3.17.
(l) "Educational Agencies" has the meaning set forth in Section 3.24.
19
(m) "Educational Approvals" has the meaning set forth in Section 3.24.
(n) "Exchange" has the meaning set forth in Section 1.2.
(o) "Financial Statements" has the meaning set forth in Section 3.7.
(p) "Inventories" has the meaning set forth in Section 3.16.
(q) "Knowledge" and "knowledge" as used in this Agreement or the
instruments, certificates or other documents required under this Agreement,
means knowledge of a fact, circumstance or event that the party whose
knowledge is being referred to has or would have upon reasonable
investigation.
(r) "Losses" has the meaning set forth in Section 5.1.
(s) "Material Adverse Change" and "material adverse change" shall mean
any event, change or occurrence which, individually or together with any
other event, change or occurrence, (A) has or would reasonably be expected
to have a material adverse effect or material adverse change on the
business, financial condition , prospects, or results of operations of the
Company taken as a whole or its business taken as a whole, provided that
any such effect resulting from any events, circumstances, changes or
conditions that adversely affect either the national economy generally or
the industry in which the Company operates, except to the extent that such
events, circumstances, changes or conditions affect the Company in a way
that is materially disproportionate to the effect generally on the industry
in which the Company operates shall not be considered when determining
whether a Material Adverse Change has occurred or (B) would materially
impair the ability of the Company to consummate the transactions
contemplated in this Agreement.
(t) "Policy Guidelines" has the meaning set forth in Section 3.24.
(u) "Registration Statement" has the meaning set forth in Section
3.28.
(v) "Revisions" has the meaning set forth in Section 3.17.
(w) "SEC" has the meaning set forth in Section 3.28.
(x) "Title IV Programs" has the meaning set forth in Section 3.24.
ARTICLE IX
MISCELLANEOUS
8.1 Further Documents and Assurances. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to better
20
evidence and reflect the transactions described herein and contemplated hereby
and to carry into effect the intents and purposes of this Agreement.
8.2 Fees and Expenses. Each party shall bear its own fees and expenses,
including counsel fees and fees of brokers and investment bankers contracted by
such party, in connection with the transactions contemplated hereby.
8.3 Counterparts. This Agreement may be executed in counterparts and by
different parties on different counterparts with the same effect as if the
signatures thereto were on the same instrument. This Agreement shall be
effective and binding upon all parties hereto at such time as all parties have
executed a counterpart of this Agreement.
8.4 Notices. Whenever any party hereto desires or is required to give any
notice, demand, or request with respect to this Agreement, each such
communication shall be in writing and shall be effective only if it is delivered
by personal service or mailed, United States registered or certified mail,
postage prepaid, or sent by prepaid overnight courier or confirmed telecopier,
addressed as follows:
If to Buyer:
Broadview Media, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Red White
With a copy to:
Xxxxxxxxxx & Xxxxx, P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxx, Esq.
If to the Sellers:
Xxxxx X. Xxxxx
0000 000xx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Xxxxx X. Xxxx
00000 00xx Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
21
Xxxxxx X. Winer1994 Irrevocable Trust u/a/d June 27, 1994
c/o Xxxxx Xxxxxxx, Trustee
00000 0xx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Xxxxxx X. and Xxxxx X.Xxxxx Dynasty Trust u/a/d
August 31, 1998
c/o Xxxxx X. Xxxxx, Trustee
00000 Xxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
If to the Company:
C Square Educational Enterprises
0000 Xxxx 0000 Xxxxx
Xxxx Xxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxx
With a copy in each case to:
Xxxxxx X. Xxxxxxxx, Esq.
Two Xxxxxxxx Xxxx
Xxxxx Xxxx, XX 00000
Such communications shall be effective when they are received by the addressee
thereof. Any party may change its address or telecopier number for such
communications by giving notice thereof to the other parties in conformity with
this Section.
8.5 Entire Agreement; Modification and Waiver. This Agreement, together
with the Exhibits and Schedules and the related written agreements specifically
referred to herein, represents the only agreement among the parties concerning
the subject matter hereof and supersedes all prior agreements, whether written
or oral, relating thereto. No purported amendment, modification or waiver of any
provision hereof shall be binding unless set forth in a written document signed
by all parties (in the case of amendments or modifications) or by the party to
be charged thereby (in the case of waivers). Any waiver shall be limited to the
provisions thereof and the circumstance or event specifically made subject
thereto and shall not be deemed a waiver of any other term hereof or of the same
circumstance or event upon any recurrence thereof.
8.6 Termination. This Agreement may be terminated at any time prior to the
Closing, only: (i) by the mutual written consent of the parties hereto; (ii) by
the Sellers if any of the conditions to Closing cannot be met by Buyer and such
condition has not been waived; or (iii) by Buyer, if any of the conditions to
Closing cannot be met by the Company or the Sellers and such condition has not
been waived by Buyer. If this Agreement is terminated as provided herein, no
party hereto shall have any liability hereunder or further obligation hereunder
to any other party to this Agreement except nothing in this Section 8.6 shall
relieve any party of liability for breach of this Agreement.
22
8.7 Governing Law. This Agreement and the relations between the parties
hereunder shall be governed by and construed and enforced in accordance with the
laws of the State of Minnesota.
8.8 Benefit. Nothing in this Agreement, express or implied, is intended to
confer on any person other than the parties to this Agreement or their
respective heirs, representatives, successors or assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
8.9 Successors and Assigns. No assignment or transfer by Buyer, the Sellers
or the Company of their respective rights and obligations hereunder shall be
made except for such transfers as are effected by death or testamentary
succession or otherwise by operation of law. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their permitted
successors and assigns (including without limitation the administrators,
executors, representatives, heirs, legatees and devisees of the Sellers), and
any reference to such a party hereto shall also be a reference to permitted
successors or assigns.
8.10 Amendment, Modification and Waiver. This Agreement may not be
modified, amended or supplemented except by mutual written agreement of all the
parties hereto. Any party may waive in writing any term or condition contained
in this Agreement and intended to be for its benefit; provided, however, that no
waiver by any party, whether by conduct or otherwise, in any one or more
instances, shall be deemed or construed as a further or continuing waiver of any
such term or condition. Each amendment, modification, supplement or waiver shall
be in writing signed by the party or the parties to be charged.
[Signatures on next page.]
23
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed, in the manner appropriate to each, as of the day and
year first above written.
BUYER: BROADVIEW MEDIA, INC.
By: /s/ Red White
----------------------------------
Red White, Chief Operating Officer
COMPANY: C SQUARE EDUCATIONAL ENTERPRISES
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Xxxxx X. Xxxxx, President
SELLERS:
/s/ Xxxxx X. Xxxxx
----------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxx X. Xxxx
----------------------------------
Xxxxx X. Xxxx
XXXXXX X. XXXXX 1994 IRREVOCABLE
TRUST u/a/d June 27, 1994
By: /s/ Xxxxxx Xxxxx
-----------------------------
Xxxxxx X. Xxxxx, as
attorney-in-fact for Xxxxx
Xxxxx and Xxxxx Xxxxxxx, the
sole Trustees of such Trust,
pursuant to Power of
Attorney, a copy of which
shall be attached hereto*
XXXXXX X. AND XXXXX X. XXXXX
DYNASTY TRUST u/a/d August 31,
1998
By: /s/ Xxxxxx Xxxxx
------------------------------
Xxxxxx X. Xxxxx, as
attorney-in-fact for Xxxxx X.
Xxxxx and Xxxxxxx Xx Xxxxxxx,
the sole Trustees of such
Trust, pursuant to Power of
Attorney, a copy of which
shall be attached hereto*
-----------------
* By his signature, the attorney-in-fact represents and warrants that he is so
authorized to negotiate, sign and deliver this Stock Exchange Agreement on
behalf of the Trustees of such Trust, and to cause the Stock Exchange Agreement
to be performed on their behalf, and that such Power of Attorney is valid,
binding and in full force and effect.
24
EXHIBIT A
LIST OF EXCHANGE STOCK
================================== ============================ ==================================
SELLERS SHARES OF COMPANY COMMON SHARES OF BUYER COMMON STOCK
STOCK EXCHANGED TO BE ISSUED IN EXCHANGE
================================== ============================ ==================================
Xxxxx X. Xxxxx 47,881 3,403,750
---------------------------------- ---------------------------- ----------------------------------
Xxxxx X. Xxxx 20,521 1,458,750
---------------------------------- ---------------------------- ----------------------------------
Xxxxxx X. Xxxxx 1994 Irrevocable 1,399 99,454
Trust u/a/d June 27, 1994
================================== ============================ ==================================
Xxxxxx X. and Xxxxx X. Xxxxx 535 38,046
Dynasty Trust u/a/d August 31,
1998
================================== ============================ ==================================
TOTAL 70,336 5,000,000
================================== ============================ ==================================
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